 This is Phil Longman, and I'm a senior fellow here, and also the research director of our new social contract policy. I have to say, this has to be the most hard core group that exists in Washington, a self-selected population of people who on the nicest weather day of 2008, most likely, have come here to ponder the demographics of the 2020s. But we all know what we're about, and we're here anyway. So I think this is going to be a great program. I personally have been plowing the fields of demographics for, I guess, close to 30 years now, and I have to say that it's a rare day in that field when you wake up and something new has happened in demography. The basic outlines of the world we live in today, in terms of its population structure, was completely predictable back in the 1970s. And many people made those predictions quite accurately. A few things along the way have been a little bit surprising. The vantage point of the mid-1970s that looked like Jared Doty. In the 1970s, it looked like the United States might have caught the same disease that was going through Europe that was causing fertility rates to fall below replacement levels. And I suppose there's probably a few folks who are somewhat mystified why, until this day, the United States remains the one great exception in having Earth rates that are at or near replacement levels while throughout the rest of the developing world, fertility has continued to decline. I suppose in the 1990s, another sort of surprise that came along gradually is, well, people had been of the mind that there must be some mechanism in the human mind and body that, over time, would lead to the equilibrium rate in fertility, such that replacement levels would be achieved. And that would be the only exogenous events would come in and maybe frustrate people from having the 2.1 children they were hardwired to have. But now it looks like we've seen fertility just fall and fall and fall in parts of Europe and Asia for more than a generation. We've seen desired family size fall below replacement level. And so we've kind of had to set aside the notion that maybe there's something about the human animal, some instinct to breed or to replace ourselves. Clearly, without the right social and economic conditions, whatever genetic endowment we have in that direction doesn't express itself. And I guess another surprise that came along the way was the fact that in modern society's mortality could increase so that we saw the Soviet Union, for example, actual declines in life expectancy. These weren't things that were predictable. So as I said, it's a rare day in demography when something truly new happens. It's also a rare day when people in this field have truly brilliant insights into the meaning of these long-term certain trends. And that's why I'm so thrilled to be able to introduce to you today Neil Howe and Richard Jackson, who are by far the most insightful observers of global demographic trends, not only today, but going back 20-some years. And not only that, but they have just recently had a new burst of creativity in this new report that they're going to present to you, which was jaw-dropping to me in its insight. I've done both these gentlemen for a very long time. Neil describes himself as an historian, an economist, and a demographer. But he's really more than all that. He is all that, but he's more than all that. He's someone who has not only accurately predicted the broad outlines of changing demographic realities correctly and consistently over the last 30 years, but has also been able to have the intuition to predict very subtle things about what the social mood would be of different decades and what would be the personality of emerging new generations. And so it's quite amazing to go back today and read a book he wrote or published in 1990, in which he predicted the personality, the sensibility of this emerging millennial generation now in college when it was not yet in kindergarten and using a process that I'm not sure I quite understand, but consistently yields up true predictions if you live long enough to see them. It's very impressive. Richard is also an amazingly gifted demographer and thinker. He is currently directing the Global Aging Initiative at the Center for Strategic and International Studies. And there over the last several years has done really a bang-up work both on a country by country basis and on a global basis about the economic and strategic implications of this new demographic order that we're all aging into. I'd like to particularly commend to you the work he's done on China and Korea, which was groundbreaking at the time and is still news to most folks. So without any further ado, have you took it out about who's going first? Well, I'm just let me just say a word at the record. I'm sorry. Well, having so thoroughly oversold us, I hesitate to even begin. Yeah, we just released the advanced proofs of a new study called the Graying of the Great Powers. That looks at how demographic trends are likely, in our view, to shape the geopolitical landscape over the next half century. That will be out in book form, certainly by the first week in May, if not sooner. Now, our viewpoint is that of the United States and the developed countries in particular. But our canvas is global, if you will. We look both at how population aging and population decline in the developed world is likely to affect or may affect both the ability and the willingness of today's rich countries to maintain national and global security. And we also look country by country and region by region at how demographic change is shaping new threats and opportunities in the developing world. Now, I'm going to turn it over to Neil, who will talk a little bit about the constraints that demography imposes on the developed countries. And then he'll pass it back to me to talk about our interpretation and analysis of demographic trends in the developing world, which we think are pushing towards a possible crisis in the 2020s. And Phil, thanks for the opportunity. I should have started out by saying this. No problem. Thank you. So I'm going to start. And I'm going to put myself on sort of a Prussian train schedule here. We're going to move really quickly. The whole idea is to get through our part so that you can ask questions. And mainly, going quickly so that you can simply see the subject areas and the various topics that we cover, obviously, in much greater depth in the book. So let's start out by the way of background here. I always have trouble with these devices. Oh, there we go. OK, we're moving. Assessing the projections. First of all, and much of this you already know, which is another reason I'm going to go quickly, the whole world is aging and the developed countries are leading the way. And as you can see, you see the share of the older population. It's going up in both developed and less developed. But it's obviously starting going up first in the developed world. And you can see, even by the year 2050, the less developed world will not quite be as old as the developed world is today. So you can see these trends dramatic as they are, again, in the dispersion. Obviously, in the developing world, you have a great variety of areas. From southern Africa to one end, to East Asia to the other, which are two ends of this aging spectrum. Here you can see the diversity within the developed world. And this theme will come back to a couple of times here. But as you can see, the US is the least aging of the developed countries. Just looking at the big six here, Japan and Italy, particularly Southern Europe in general and Japan, are at the high edge. Particularly the difference is that all the US is going to age dramatically, particularly during the 2020s and early 2030s with the aging of the baby boom, which is such a pronounced demographic feature of the American, English-speaking countries. It stabilizes after about 2035, whereas the rest of these countries continue to age. And that's why by the year 2050, they're much older. The next thing is the point to make, obviously, is the two forces driving this aging is falling fertility and rising longevity. Falling fertility, Phil already alluded to this. In the early 1960s, every developed country, and you can see certainly all of the big seven countries, had fertility rates well over the replacement rate. Today, every developed country has fertility rates under or at the replacement rate. The US now is just budging up to just about 2.1. And France is also slightly higher now, but they're all under. And as Phil was pointing out, many of these countries are way under. Again, life expectancy, this is the other driver. Not only are there fewer people being born, which reduces the population profile at the young end, but they're living longer, which expands the population pyramid at the old end. Populations in most developed countries will not only age, but stagnate or decline. And that's due to this declining fertility. Particularly countries with lower than replacement rate fertility will necessarily ultimately decline in size. And here you can see some of the trends. Here is the entire developing world, these two bars. This is the total population and the working age population change. You can see this is the US, continuing to grow quite a bit more. This is the rest of the developed world, actually declining by working age population, declining by 17% over the next 50 years. And the overall population by 3%. You can see, of course, some of these countries with very low fertility rates are going to be shrinking quite rapidly, particularly they're going to be shrinking after the year 2020. Generation gap and growth gap between US and the rest of the world, and that simply follows in this fact. And we're going to come back to that repeatedly. Global aging, as what we often call, as close to social science comes to a certain prediction about the future. Remember, everyone age 60 in the year 2050 has already been born. We can already count them. This is no mystery here. And even looking 30 years down the road, although fertility rates may change, there's something called demographic momentum. Even if fertility rates rise, the fact that there's so few young adults means it's going to take many years of increased fertility rates in order to substantially increase the aggregate and actual number of babies being born. Consequences for the developed country in terms of its outlook, population and GDP of the developed world will steadily decline as a share of the world total. Population share will go down gradually. You can see this as a share of the total down to just over 10% by the year 2050. And the GDP share will be down more sharply, as you can see, particularly due to the suddenly much slower growth of the working age population in the developed world. And also due to, at least in our projections, the fact that the last 10 years have been accelerating economic growth in much of the developed world, particularly places like China and India. Population and GDP in the United States, on the other hand, will steadily rise as a share of the developed world. So this is another feature that you're going to see. This is the US share of the total GDP of the developed world, which was at its lowest right around the 1970s and 1980s, is already recovering on a purchasing power parity basis. And as you can see, population continuing to increase as a share of the developed world total. English-speaking population, 42% of the developed country total in 1950 will be 58% by the year 2050. US GDP will exceed the 1950 share by 2025. So you can see that's another theme, is this renewed importance of the US, and obviously, too, a reordering of the largest nation roster. This is a list of the largest nations of the world population-wise in the year 1950. Six of the top 12 were developed countries, and one remaining one was, of course, Russia. First and second world were seven of the top 12. In 2005, only three of the top 12 are first or second world. US, Japan, and Russia. By the year 25, the US will be the only remaining member of the first or second world that will be in on this list. Interestingly, remaining right at number three, and India and China will trade places at number one and number two. Consequences? Well, one is just the consequence and the change in absolute size. And we went back and looked historically and looked at military strategists and national strategists, and also look at economists, looking at why does this matter? Why does population size matter? Well, here are some of the lessons of history, as it were. Forgone advantages of population size, obviously, one of them, and this is an age-old story, is military. Service age mobilization. Klaus Fitts once said that higher numbers is the number one principle in determining victory. Voltaire used to say that God favors the bigger battalions. This is an old rule in history, and it comes back to us in places like Iraq, right? People complain about boots on the ground. How many people do we actually have to serve? An old lesson in history. But non-military as well, migration and occupation. Take a look at countries like Russia, which are now demographically imploding. And look at how you have Turks from the South, Koreans, Chinese from the East, and you see the actual native ethnic Russian population getting to migrate west and north. And you can see there's almost an osmosis effect. When a population is declining, this historically might actually be more important than this, the non-military migration effect. And here you can see, just in terms of recruitment age population, of course, these are the younger populations, it's even more dramatic the change than in working age or overall population. Foregone advantages of economic sides, obviously. Superior economy in terms of national defense, national securities, logistics, training, and weaponry. In terms of non-military, international transfers, commercial and financial leverage, economies of scale. And Ken Deniston over at Brookings Institute, and he worked on his Denison, worked on his study looking at the causes of increased productivity in America since 1929, estimated that 18% of total increase in productivity was due to economies of scale. Simply the effect of having a larger economy, almost the same effect as capital formation itself. And obviously, a further constraint in aging and rapidly aging countries is the projected fiscal crowding out. And this is going to be huge. Here you see, compared to the defense, the size of the increase, this is the size of total old age benefits. Is that correct? Is the amount? The chart compares the current level of defense spending as a share of GDP in each country with the projected growth in old age benefit spending. So compared to the fact of foregone size is the fact these rapidly aging countries will have enormous constraints in their public sector budgets. There'll be fiscal pressure, not just on defense, but on any international spending, whether development assistance or anything else. Foregone advantages of both a proven track record of profiling in conflict. This is hard power in the fact that the countries which are bigger and more larger economies generally tend to prevail in serious wars and also in multilateral leadership. What Michael Mandelbaum might call the case for Goliath, the fact that a large country is able to actually set up some sort of world government or international rules in which order can prevail. And another thing we covered is changes in economic performance. And I'm going to go through these quickly. Economic structure and these aging and stagnating population economies, we're going to see falling rates of investment, falling ratio of producers to consumers, obviously since much more of the population will be retired, and a shift of consumption from young to old. That's already taking place, of course. Savings rate. Theory and data suggest that falling the savings rate and probably a fall more than investment rate. This is the new wisdom that's just emerged over the past 10 years, which we examined in some detail in the book. The fact that all these multinational regression models now suggest we're going to see a considerable fall in the savings rate more than the investment falls. And of course, this will, one of the reasons we're going to see savings fall, not just because of declining private sector savings, but huge pressure, again, from public sector to savings. And here you can see simply the impact on public sector deficits of the increase in public pension spending, if just in public pension spending, if that were all translated into deficits. Global capital, obviously if the savings declines more than investment, we're probably going to see a rising inflow to the developed world resulting in larger and more volatile trade imbalances, rising debt service costs, rising political influence wielded by creditors. The whole issue of sovereign wealth funds is now rising already in the headlines today and the possibility or fear of default. Other economic issues, workforce aging. Take a look at this. The ratio of workers over 50 to the number of workers under 30 in the developed world. 61% in 1980, look where it's going. Look where it's going to be in Germany and Japan. Well, what do we know about an older workforce? Again, an issue we examine in the book. More risk averse, less mobile. There's a lot of discussion in the literature about that. They're closer to retirement. They're more risk averse. They have ties to the community and families. They're less mobile. It tends to transform frictional unemployment into structural unemployment. They're less entrepreneurial. We have something called the Global Entrepreneurship Survey, which the London School of Economics publishes yearly, which makes this quite emphatically, globally, that entrepreneurs tend to be young. Sly caused an overall productivity, but a large shift in the type of productivity. We have a discussion there, if you're interested, in pushing what's called fluid to crystallized abilities. It turns out, old people do have productivity advantages, but they tend to be in doing very well the things that they've always done. And when the economy experiences a sudden shift and the rules of the game change, it turns out many economists have actually found that younger workforces respond better and change more rapidly. And the older workforces do better when the rules of the game remain unchanged. Market psychology does demographic stasis trigger business pessimism. And this was written about a lot of vacanins and his followers like Alvin Hansen and so forth, and a big tradition going through kuznets and others. Market products is considered a stagnant production, resulting from stagnant or possibly declining workforce size. Generally, in the literature, it generates a tendency toward excess capacity, price wars, and cartels. Stagnant labor markets, higher labor adjustment cost, because obviously you can no longer adjust labor by simply hiring fewer people. You actually have to start firing people in an economy of stagnant size. And in all markets, any competitive public intervention, these things as the business historians look at. And finally, we look quickly at consequences in the changing of social mood generally, not just in the economy. The psychology of aging and social outlook. And there's a fair literature on this. Cicero once used to say, youth are for action and older for counsel. The old idea that people have different temperaments as they grow older. And this is why we might call the age effect. And there's a very large literature on this. In fact, we tend to become a little bit more rigid in our outlook and inflexible. We tend to see things the way we saw things coming of age. It's harder for us to see things in a new way, which is the way young people see things. And also, that's biological. There's also the rational difference. When you're older, you have less time left. So of course, you're going to take fewer risks. Let's face it. I'm not going to be around as long. The life isn't going to be quite the same to me. And we actually calculated in the developed countries the share of the population that will have less than 20 years of life remaining. Very interesting. It's interesting to suppose how that might change as sort of the mood of a country. Shifting family structure. We're going to see fewer siblings and more firstborns. Nick Averstadt projects and suggests that by the middle of the 21st century in Italy, children in Italy, 60% of them will have no brothers, no sisters, no cousins, no aunts, no uncles. We will have very narrow and very long families with parents and great grandparents, but no siblings. And there's a literature on how this is going to change the personality of people growing up in such families, which I won't go into at the moment, but it's quite interesting. Policy impact of weaker extended families. Extended families generally get people jobs. They're social safety nets. Will this encourage the state to come in and replace some of these functions? Growing ethnic and religious diversity. And if you have a, I think on this one, I'm just going to pass and say if you have a question about it, you can ask us. But there's some interesting new research on assimilation and social trust. Some of it, for instance, the recent findings from Robert Putnam, which is not so optimistic on this, on the implications of diversity and social trust, and also the rise of what we might call diaspora politics, when we have a large share of the developed countries coming from abroad and actually having direct links from the politics abroad. And finally, aging and electoral politics. And maybe I should say no more about that, but just think about the effect of organizations like AARP when you have this enormous increase in the share of the adult population. That is to say basically the electorate, which is over age 65. And with that, I told you I'd move rapidly through the subject. And I'm going to turn it back over to Richard. Very good. As the term global aging implies, the aging of the population is indeed a worldwide phenomenon. Most of the developing world is now in the midst of what demographers call the demographic transition. This is the shift from high fertility and high mortality that characterizes traditional societies to low fertility and low mortality that characterizes modern societies. This occurred in the developed world, beginning in the late 18th, early 19th centuries. Unfolded over about two centuries in the transition is now complete. In most of the developing world, it got underway in the 1950s as mortality rates, particularly infant and child mortality rates started to fall rapidly. And then it accelerated in the 1970s as fertility rates began to decline as well. Now, since the early 1970s, the fertility rate in the developing world overall has fallen from 5.1 to 2.9. The population growth rate has declined from 2.2% per year to 1.3% per year. And the median age has risen from 20 to 26. But these overall numbers, how do I, this one here? OK. OK. There you go. There we are. OK. These overall numbers, of course, conceal considerable variation in diversity across the developing world. As Phil already mentioned, at the high end, you have sub-Saharan Africa, where fertility is really still at traditional levels, an average of 5.6. In China and East Asia, in Eastern Europe, and in what we call the Russian sphere, basically Russia and the Ukraine and the Slavic members of the Commonwealth of independent states, fertility is now beneath replacement. 34% of the population of the developing world now lives in countries where fertility is beneath the 2.1 replacement level. But at the same time, 46% of the developing world's population lives in countries where fertility is still above 3. So in fact, the countries of the world are becoming, they're not converging. They're becoming, at least over the next several decades, less alike, not more alike. Now, despite the, well, this just shows the impact on the age structure measured by median age, despite the diversity, there are a number of demographers, political scientists, and geostrategists who suggest that unfolding demographic trends in the developing world are, in fact, pushing it toward greater peace, prosperity, stability, and ultimately democracy. We call this, this is our coinage, I think, the demographic peace thesis. And it starts from the observation that societies with very young age structures tend to be prone to violence, instability, and state failure. And there's a large literature that demonstrates this. According to population in action international, between 1970 and 1999, 80% of all civil conflicts in the world occurred in countries where more than 60% of the population was under the age of 30. Other scholars look at what they call youth bulges, which is the population in the volatile age 15 to 24 age bracket as a share of the total adult population. And one prominent scholar, Heinrich Erdal, finds that each one percentage point increase in the youth bold share increases the risk of conflict by 4%. So the correlation between youth and violence is well-established in the literature. Population action international talks about the demographic transition as moving us towards a security demographic, a demographic that's more propitious towards stability in the long run. French demographers Emmanuel Todd and Youssef Kurbaj talk about a rendezvous of nations as fertility decline brings about a convergence across the developed and developing worlds in the decades ahead. Geostrategist Thomas Barnett, looking at demographics in the Middle East, says that time is on our side. This is a wait for the demographics to unfold and a lot of the problems that we have today because of extremely young age structures will resolve themselves. As you may have guessed, we have a somewhat different perspective. Actually looking at unfolding demographic trends in the developing world, we think that they're increasing security risks, not decreasing them in the decades ahead, that the period of greatest danger, in fact, lies ahead. And as we'll come back to when we tie things together, we see a confluence of danger as demographic trends perhaps triggering major geopolitical stresses and problems in the 2020s. So let me take you through our perspective on the demographic challenge in the developing world point by point. And the first point is that, in fact, as we've seen, the transition is progressing unevenly. Fertility hasn't fallen everywhere. In some places, where it's begun to fall, it's stalled. Most obviously, sub-Saharan Africa, where the youth-bold share of the adult population is now 35% compared to about 16% in the developed world, that will barely change over the next 25 years, even under a projection which assumes that the transition progresses and fertility begins to decline. Now, in other regions of the developing world, youth-bold shares are beginning to decline. Fertilities come down in the Muslim world, both Arab and non-Muslim Arab countries. It's come down dramatically in Latin America. It's coming down in South Asia as well. But these regional averages can be deceptive. In fact, there are a significant number of Muslim-majority countries, including Afghanistan, the Palestinian territories, Iraq, Sudan, and Yemen, where demographic transition has failed to gain traction. Fertility rates still tower in the 4 to 7 range. And youth-bolds will remain at sub-Saharan African levels for at least the next two decades. Furthermore, there is an additional dynamic, which is largely missed by the demographics and security literature. And this is that the demographic transition is non-linear. Let me show you this next chart. You have declining youth-bolges. So that's the 15 to 24 population over the 15-plus population in the Arab world, non-Arab Muslim Asia, India and South Asia, and Latin America. But here we're looking at the growth rate in the population 15 to 24. And what you have is an oscillating dynamic. You have a bust generation, a baby bust generation, coming of age now in all four of these regions. So the rate of growth in the youth population is decelerating rapidly. And youth-bolds shares are beginning to decline. So everybody says, well, this is heading in the right direction. Time is on our side. But in the beginning in 2015, the bust generation will give way to an echoboom generation. It will be the children of the last generation born when fertility rates were back up at 6 and 7 will be coming of age. So you have a large generation. When fertility declines rapidly, it gives rise to a series of echobooms and echobusts. And you have an echoboom generation that will be coming of age in the 2020s. And we'll come back to this later in the presentation. There's a name for this, right? It's called Sun's Law. The Sun's Law. Yeah. A Swedish demographer actually talked about this in the turn of the century. And it became famous when you suddenly stop, suddenly plunge of fertility rate, you get this periodic isolation for many decades after that. And he was the first to observe this in the records. Right. Right, exactly. I think of the mid-19th century, actually. So you have stalled in backtracking transitions. The next big point is that although there is a very strong correlation between youth and violence, and particularly civil violence, it turns out on closer examination that it isn't the very youngest or the very poorest countries that are most prone to violence and least stable, but countries that are at least partway through the demographic transition and partway through the development process and the development process generally tracks the timing and pace of the demographic transition in most countries. There's a substantial literature that's looked at age structure and development proxied in various ways by per capita income and so forth, going back a century. And it turns out that the highest incidence of violence and conflict is generally in the second or third income quintile. And among countries that don't have the very youngest age structures, but in which fertility has begun to fall, mortality rates have begun to fall, and populations have begun to age. And this correlation is strongest for the sort of hump-shaped relationship between security threat and age structure and development is strongest for the most serious types of security threats, for interstate war, for state organized murder, genocide, and especially relevant today for terrorism. I don't know how many of you noticed a couple of months ago, but a recruiting roster for al-Qaeda in Iraq was discovered. It's like an HR document. It's sort of the intake recruiting roster that lists the residents, the country of origin, the profession, the educational attainment, and so forth of all the foreign fighters coming in to join al-Qaeda in Iraq. And where do they come from? Well, they don't come from poor Muslim countries. They come from middle income Muslim countries, mainly in North Africa, the Gulf, countries, again, that are at least partway through the demographic transition and the development process. And this should hardly be surprising because demographers and particularly development economists who've looked at the development process all agree that it generates enormous economic, social, and cultural stresses. I don't have time to dwell very much on these here. We discussed them all in the book. But let me just tick them off. First, there's integration. You take a traditional society, and you integrate it into the global marketplace. The economy is monetized, traditional forms of family-based employment, give way to wage employment, and so forth. The society is exposed to the global culture. Who's the, who coined the term, McWorld? That was, yeah, McWorld versus Jihad. Yeah, McWorld versus Barber. Barber. Barber. Exactly. Exactly. Exposed to the global culture as development progresses, rates of urbanization accelerate, generating mass internal migration in many cases. Income inequality rises. Income inequality tends to be low in traditional societies and low in affluent societies. Again, it's a hump-shaped, all of these stressors, or most of them are hump-shaped phenomena. In other words, the stress becomes, rises during the course of development before with rising affluence it begins to fall off again. Inequality, international migration, ethnic strife, because during the course of development some groups in society tend to do better in the marketplace than others. There are many, Amy Chua has a fantastic book on market-dominant minorities and the stresses that this causes with majority populations. Religious extremism and, of course, environmental degradation. So all of this rises during the course of the transition and development before it subsides. Now, this is not to say that perhaps at the end of the day the transition might not push towards greater peace and prosperity, but a point we really insist on in the book is that journeys can be more dangerous than destinations. Now, all of this can increase the risk of state failure, and this is a second big point, a second big takeaway, if you will. But in reaction to that, we argue that it also increases the risk or the likelihood of neo-authoritarian reaction and consolidation. The China model has an enormous appeal in the developing world today from Venezuela and Vietnam to Libya and Burma and the United Arab Emirates, and it has a two-fold appeal. And the first appeal is obvious. This is the one everybody writes about. It's the track record at sort of harnessing the forces of development and boosting economic growth. But there's a second appeal, and that's its ability perhaps to stave off the social chaos and risk of collapse that can occur in rapidly transitioning societies. So there's both a heightened risk of state failure and a heightened risk of neo-authoritarian reaction in rapidly transitioning societies. And sometimes, the very fact that sometimes both risks seem equally plausible is itself very suggestive. Think of Russia, which a decade ago seemed on the verge of collapse and is now lurching back rapidly towards an authoritarian state. I seem to have gotten ahead of my presentation here, which is okay, let me just... Now, there's no question that if rapid development gives rise to rapidly rising living standards, that this can sort of catapult countries quickly through the worst danger phase of the transition and of development. And in fact, there's a phenomenon which is much written about and which is in part underlies the whole demographic peace thesis notion. And this is the idea of the demographic dividend. What happens when fertility first falls? Well, when fertility first falls, you have fewer kids to take care of. Society's dependency burden declines. You have a rising share of the population in the working years, with a larger share of the population in the working years and declining dependency burdens, rates of savings, and investment may rise as well. Women's time is freed up for participation in the market economy. All of this can boost productivity and living standard growth in principle. But when you look around the world today, it hasn't happened everywhere. In fact, it's only happened dramatically in East Asia. This is the cumulative percentage increase in per capita GDP since 1975. 700% in East Asia. 158% in India and South Asia. If we looked at the past decade alone, India and South Asia is beginning to accelerate. But looking at the past decade alone, the others wouldn't change all that much. And you often hear, well, this has happened in East Asia because fertility declined first and the transition has progressed more rapidly. So this will happen in turn in the other regions as they move through the transition. But in fact, dependency ratios have been falling and working-age shares of the population have been rising and steeply everywhere in the developing world, except sub-Saharan Africa since the mid-1970s. One study estimates that the difference in demographics between Latin America and East Asia accounts for only 11% of the difference in GDP and per capita GDP growth. So it requires more than demographics. It requires institutions and the culture and governments capable of harnessing the favorable demographics and boosting growth. Phil, do I need to... Do I have a few minutes? Well, you go ahead, Rich. I'll see to you. We're just about down here. Let me move more quickly. The next point is that stalled transitions and backtracking transitions with this echo boom pose a challenge to security but sow the transitions that proceed too fast and too far. The very fact that fertility has fell so precipitously in East Asia at the beginning of the 1970s and has plunged beneath replacement, this gave rise to this huge demographic dividend that helped boost economic growth but this very fact means that East Asia now faces a massive age wave which will be arriving when it is still at a much lower level of per capita income than the developed world was at an equivalent stage in the transition. I don't know how many of you know that China will actually be an older country than the United States by the 2030s and this overlay of rapid aging and rapid development can act as a multiplier on all the social stresses generated by the transition and development. We can talk more about that during the Q&A. Meanwhile, Neil has already talked about this and I think Phil as well, population implosion in Eastern Europe and the Russian sphere. 35% loss in the total population and even more than that in the working age population by mid-century. And finally, what we call the new demographic competition. When fertility rates begin to fall they don't fall at the same rate necessarily for all ethnic and religious groups in a society and in fact throughout much of the developing world today we have widening differentials in fertility and population growth rates. This is true in India between Hindus and Muslims and Nigeria between Christians and Muslims between Muslims and Serbs and Catholics. We see this in many parts of the world. Groups that are shrinking relatively as a share of the population may feel their traditional position and privileges threatened. Groups that are growing more rapidly may feel emboldened to seize more power. All of this dynamic can be further exacerbated by rapid development because as I mentioned some groups do better in the marketplace than others and also by rapid democratization because the ballot box empowers the majority. There's a second type of demographic competition which Phil Longman has written about. A competition within ethnic and religious groups between the more secular and the more religious. There are very large differentials in fertility rates according to intensity of religious conviction. This is true in the United States there's a statistic that Phil cites the fertility rate in red zone Utah is 50% higher than the fertility rate in blue zone Vermont. It's true in Israel where the fertility rate for ultra-orthodox Jews is I think 6 or 6.5 versus 2.5 for more secular Jews it's true in the Muslim world where those who when asked the question should Sharia only be the law of the land those who say yes those who say yes this is among urban dwellers have a fertility rate that is twice as high as those who say no. And this suggests that the degree towards which the transition and falling fertility is pushing countries towards modernity you had a great quote on this Phil which I'm trying to recall maybe I'll look in my modernity may be an evolutionary disadvantage I think or something to that effect and then finally at the family level another kind of demographic transition this time between baby boys and baby girls in many rapidly transitioning societies in eastern South Asia we now see these huge gender imbalances in China in China the gender imbalance is now 117 or 18 boy babies born for every 100 girl babies in a normal population that's 104 or 105 for every 100 in the context of falling fertility of sub-replacement fertility traditional societies want to ensure that they have at least one son this gender imbalance will give rise to bachelor surpluses which may pose big security problems for China in the future it will also ultimately give rise to bachelor surpluses and bride shortages and ultimately to daughter-in-law shortages which will greatly complicate the challenge of caring for the elderly in a society in which only one out of six people is accumulating any right to public or private pension coverage people depend on the extended family in a Confucian culture it's the son that has that responsibility but it's for caring for his parents in old age but it's not the son that does the caring it's the daughter-in-law so our purpose really is to raise a series of cautions about what we think is an inappropriate complacency about these emerging demographic threats and let me just turn this back to you to wrap up yeah do you want to turn it over to thanks pretty much I'm just going to ask one quick question don't take too long answering it because I do want to give some time for the folks but a big part of your analysis points to the great differential in the US demographic position versus the rest of the developing world and I'm just curious how confident you are that the United States is going to remain immune to these factors that have been driving down fertility among our peer competitors we're seeing very rapid declines in fertility in the Latin world we know that there's some kind of iron law that says that although aging societies on paper need immigration very much a feature of their aging tends to be increased xenophobia for the differential fertility reasons you're talking about in general historically it's about I think four major reasons why people have had children the biggest one is they've had them by accident as Americans we've figured that one out pretty much they had children because children in a rural economy make contributions to the household particularly young ages five or six they can feed the chickens and such that's not a factor for us people had children because it was the only sort of viable way of gaining support in old age and now we have an advanced financial system and welfare state that gives us at least a chance of being able to enjoy retirement without actually being parents just as long as everybody else becomes a parent and then there was also the reason to have children that God said to have children which I think does explain the much higher differential rate among orthodox and more secular folks and I do think it's a large reason why the United States does have a higher birth rate than say Canada or Europe where secularism is much more pervasive but nonetheless that's just one of the four reasons that we might be clinging to what are your theories as to why we've escaped this downdraft that the rest of the world has we haven't escaped it obviously the fertility rate today is much lower than it has been historically if you look at fertility rate in the United States of the past two centuries it looks like a long drop from about 8 in the early 19th century down to what it is today however we do have a different culture in this country we do have a different attitudes we do have a different level of secularism as you were just alluding to we are a nation of immigrants and we have that tradition and that infusion which works strongly in our culture and I would say the biggest reason is is the extraordinary stability since the late 1970s in the fertility rate it's really stabilized at about 2.0 to 2.1 and it's been what? 25 years now it really hasn't changed in fact lately we've had two peaks right around 1990 in the last few years when it's gone back up just about to 2.1 so I'm just the biggest reason is is that we've now had almost a full generation of real flat towing and no real tendency to change so we figure back just leave it right there we've had low fertility countries in Europe and in Japan we've had a full generation of fertility well beneath which that's a new social norm there doesn't seem to be a lot of movement the country seems to have stabilized the United States seems to have stabilized at a higher level great let's open it up yes sir I'm Dr. Baster consultant in national security policy there are two points I would like to make one of them is extension of longevity I have been following by a gerontology very closely for the last seven years attending conferences and such there's been growing and what key by a gerontologist are telling me that if they get enough money they can extend longevity and this is critical without aging related diseases without cancer heart diseases whatever for anywhere between 10 to 20 years within 20 years now I proposed a Manhattan project for human longevity because the cost of medical care is killing us and this will give us a retreat at least for 20 years I don't know how this is going to affect your scheme of things probably not very seriously but it would create new problems and new challenges for example if we get human population which whose longevity is extended by 20 years and these are vigorous healthy people the most competent of them will stay on their jobs the least competent will obviously retire and obtain their social security but this will block promotion for the younger generation so they can wait two, three, five, ten years but then they will become restless this will create instability and then we have to correlate this with aging and such and how much instability will be created and what this means for society that remains to be seen second point I would like to bring which you didn't bring up here is the cost of aging for Medicare and healthcare in general I computed on the basis of this that social security provides us and such that by the year 2080 the annual cost of Medicare will be 14.75 trillion dollars this is killing the country I mean this is killing the military budget this is killing other budgets and and so on and so forth so that would be a very serious problem I'm finishing I'm completing this so that's why I propose this Manhattan Project for Human Longevity we got to do something about it you know there's the old joke the Surgeon General that comes to the President says I have good news and bad news and Phil may remember this and the President says well you know I'll start with the good news he says well we've just had this incredible medical breakthrough everyone will be able to live to 170 the President says that's wonderful I mean it's just unbelievable I have to announce this to the American people what's the bad news and he says to pay for it everyone's going to have to work to 150 we're going to have to spend all our money on doctors but the point it's interesting our longevity assumptions are generally fairly conservative and I know Richard can explain that in detail but they assume less than historical rates of longevity growth so obviously probably more of the surprises in these projections would show up on higher than projected longevity meaning older populations obviously we would have to restructure senior entitlement systems throughout the developed world in order to afford we're going to have to restructure them anyway in order to afford the longevity we were already projecting one interesting question though that came up in our research in this book which we had not previously investigated was the what does this mean for the workforce let's assume that we can have people work longer and what was fascinating and I didn't know before reviewing this literature and you can take a look in our book we sort of summarize it there is that over the last century the age at which great inventions are made great discoveries are made most measures of creativity at the highest level have shown no tendency to age and in other words what we may end up with are experienced great people doing wonderful things but not really adding to that period of life which is most associated with sort of creative breakthrough fascinating studies of Nobel Prize discoveries of great books, great paintings contributions to the academic literature and quite a variety of studies we summarize them in the book and I think that's actually worth thinking about people may be living longer but they may be contributing but they may be contributing increasingly in that category of what I describe as the crystallized knowledge rather than the fluid knowledge rather than the new discoveries and that could change the tone of our society in a very interesting and somewhat unprecedented way there's a question you still have your question oh yes I guess as you said you went through the information rather rapidly I was just wondering do you have any predictions or suppositions about how the changes you've described would affect political stability in the United States or not? we do talk some of what we describe I think touches on those issues for instance when we talk about diaspora politics particularly over these things we've certainly talked about the changes in the aging of the electorate in terms of its influence on public budgets we have a discussion of the changing shape of the family how it's going to influence on what people expect from government we talk too about the temperamental differences of the children of very small families how that might change their behaviors voters and as business leaders so there is I would suggest that's all in chapter chapter 3 I mean just to follow up on what Neil said in aging an aging electorate an aging population it will probably tend to lock in current priorities make it more difficult to shift resources to new priorities it may make it more difficult for society to respond to foreign policy emergencies we think all of this is likely to be more acute in the more rapidly aging societies of Europe and in Japan it will be in the United States but these are issues here too one issue we talk about as well is the image of the developed world in the eyes of the developing world which may seem increasingly in terms of soft power in terms of our cultural image of the developing world as an image of elders the culture of the 60's which went around the world and everyone thought about these young kids and genes and that image will instead seem like an old culture to younger people and when Richard mentioned the idea of the rise of neo-authoritarian regimes I would suggest that they may try to co-opt the image of being really in favor of the young versus all of these liberal democracies which are increasingly the bastion of bold people out of touch with the aspirations of the world's rising generations I can see it's not hard for me to see that in 20, 30 years down the road particularly if we don't engage more constructively in the developing world yes, yes, absolutely I wonder if you could sort of put together your optimism about the United States economy and security issues for example, if we're going to be relatively rich wouldn't we do what the Romans do in other words, hire regions hire divisions from the developing country to use as our proxy armies well I yeah, we're going to see various we're going to see more and more substitution first of all of technology for labor but we argue in the book for military manpower but we argue that there's a limit to that and that you will always need boots on the ground and so we're also going to see as you suggest various ways to substitute non-native for native manpower this is an area where the United States like ancient Rome perhaps enjoys a certain advantage because we don't necessarily have to hire mercenaries the offer of citizenship is an enormous inducement to service we have very high rates of enlistment among Hispanic immigrants the government has already expedited the naturalization process for legal permanent residents who enlist in the armed forces and some security experts Max Booth over at Brookings has argued that we should actually begin actively not only recruit illegal immigrants here but actually begin recruiting potential immigrants abroad but all of that comes with the caveat and that's that Rome also learned that the point at which in citizens no longer feel it's their duty to defend their country is the point at which a civilization begins to decline and we are served against a lot more of that yes sir first I want to say just the flying of these possibilities the one thing though they are is an important service and gift to those of us who would like to create a more hopeful set of possibilities but two kinds of possibilities occur to me in the context that you're talking about one is I see some optimism in the hope that the species may respond to global warming like we have something collectively in common and that has the possibility of different kinds of dynamics and dialogue that put our common faith and some sharing in place at least I see already these industrial economy paying for trees elsewhere and protecting the rainforest and so I see those kinds of possibilities as a kind of collective sanity the other thing that I see is as people talk about the concerns that you have about Medicare and care and disability my own work has been to create a different medium of exchange to enable people by earning by civic engagement to earn different forms of informal support and to rebuild connectivity and community as a different exchange process to begin and that the work that the market requires maybe less the work that we need to build community to deal with child development as an authentic new frontier an elevated contribution as a different kind of civic contribution the kinds of work that have been extracted from the community and marketized that looking at civic engagement cultural development social justice efforts those domains of labor that are not about market price may in fact be the labor shift that you're talking about so I just throw those out as two kinds of hiding we need to think about other possibilities just because of what you're sharing with us since we're getting short on time why don't we take two more questions and you can answer the last three well, once, okay? Yes, sir. I want to kind of understand a little more about China you mentioned the premature aging in China you're delivering more and what's the implication for China? In China, there's a huge population and there's a policy of white babies white child, yeah and there's still some people arguing they should change this policy so what was your comment on this? Last question I you talk about the increased rigidity of the aging population psychological rigidity and economic conservatism probably goes along with that does your demographics imply that there would be a depressing market effect on productivity and entrepreneurial spirit as the population ages? Okay, that's it. One more you mentioned fertility as though it's dropping and falling but I would like to say that women, only women bear children and their fertility has not changed the ability to bear a child it's just a choice to have children so if you, fertility is a question of asking women what is it to make them want to have old babies, old us babies perhaps that's the focus that we should be looking at Well, that's a good question They're all good questions should we take them and what orders should we take? Well, let me take first the one on the aging and productivity the question you asked it's interesting when you look at the literature is that these two one thing rises with age and that's experience and certain capabilities interestingly such as usage of words and various kinds of verbal categories actually don't really decline much with age other things, all of the basic things of fast reaction time solving new kinds of puzzles and so on actually decline fairly rapidly it's kind of scary for me to think after the mid-20s I mean you see the literature very smart people not so smart people both genders, it's been done across cultures this stuff is extremely robust this research okay, you got some things going down you got some things going up it turns out that one of the central findings of this literature is that people in their 40s are often a very good sort of compromise here some economists actually think that productivity rises productivity growth rates rise most with economies with a large share of their workforce in the 40s before the 40s you get the problem of not enough experience after the 40s you get too much rigidity the problem that's also been identified is that an aging workforce is not so bad when the economic conditions or the technology does not change much and according to a couple of researchers when the IT began to change very much the whole information technology began to change very rapidly in the 1990s the economies which were best at picking up on the productivity in those industries were the younger ones in other words the optimal age point of productivity actually went down the age scale so I think that answers a little bit of I suppose if you're a very old workforce and you want to remain in good shape you probably should just hope things don't hope the basic context of competition and the basic nature of challenges probably is very much because you will be very effective at using what you've learned to continue to excel in that area I guess that would be one of the things I would infer from the literature but you can judge for yourself looking at it you're absolutely right to come back to the fertility point but only women have babies that's been my experience as well in fact in fact I mean demographers really are only interested in women you know in terms of tracking fertility behavior they conduct surveys they ask women what's the ideal number of children in a family how many children do you expect to have and then they look at how many they actually have and they see how these compare over time one of the things that's fascinating if you look across the developed world today all countries are at a fairly low fertility very low fertility level by historical long term historical standards but you have this considerable variation between Japan down at 1.25 or 1.3 and a lot of and the rest of East Asia actually and Mediterranean Europe also very low and Eastern Europe and the Russian sphere as well but if you look across the developed countries what are the big surprises if you're not familiar with the data it's kind of counterintuitive you think okay a big driver of the fertility decline must be the entry of women into the labor force and the whole shift in gender and social roles of women but if you look across the developed countries the correlation runs precisely the opposite way it's the countries that have the highest rates of female labor force participation but have the highest fertility rates so what's going on what's going on is that the countries that have been most successful at sort of adapting workplace and social institutions and family culture to the change role of women end up with higher fertility and higher labor force participation and the countries that haven't which tend to be the more traditional societies end up with both low fertility and low female labor force participation and when I give a presentation on this in Japan I sometimes joke that the solution to the low fertility problem in Japan is that they aren't doing the dishes and then there was the question on China and you're absolutely right there is a debate I was in China just two weeks ago and there is a debate within the state council now I forget but some officials suggested that they were going to relax the one child policy and go away with that and that was that vigorously denied a debate a debate about that it's an interesting question how much would fertility go up in China if the one child policy were scrapped all together but it's not clear fertility has come down everywhere in East Asia the lowest fertility countries in the world South Korea, Taiwan, Hong Kong and Singapore but it came down at a much earlier and lower level of per capita income in China so it might come back up somewhat but the whole premature aging problem in China I think is a big deal because the age wave hits in full force this is the 2020s crisis we didn't manage to close the loop on that but in the 2020s just as China stopped becoming a solidly middle income country all of a sudden the demographics that have been underpinning its economic growth shift dramatically and start pushing the other way I have a report called the graying of the middle kingdom and that's on our website it's worth pointing out too that actually a fairly large number of countries now are explicitly looking at or have passed measures intended to boost fertility and this is all within the last 5, 6, 7 years including Germany and Spain Russia this is becoming an hysteria this is Putin's number one national top of his agenda and the fact that China is considering relaxing it's one child law I think it's part of this new movement as Phil I think now is in Portugal they actually considered that would pick up on Shirley Bergeroff's suggestion which was going to actually tie your social security benefits to the number of children you have so there'd actually be a relationship which would bring back that relationship that you said no longer exists between having kids and how you're going to be cared for in old age no country has yet done that but it would be very interesting to see if the next 10 or 20 years you don't see developed countries actually proposing to link these two to reinstill there's an extraordinary shift underway as Neil suggested in attitudes towards family size and in pronatal policy we quote the slogan in the book there was a family planning slogan in Singapore which is up until a decade ago just two children is enough now the new family planning slogan is F3 if you can and in South Korea there was a government office family planning office in the 1960s, 70s and into the 80s they went village to village implementing family planning policies and passing out contraceptives and so forth the purpose, the mission of that office has now been changed to raising birth rates there's a dramatic shift across all of these low fertility countries both developed and developed on the radio today I was hearing about food crisis so I wonder how the factor of just resource availability around food and oil and energy resources puts a twist on the analysis around market activity and so forth it certainly is going to add to the stress on these low to middle income countries developing countries that Richard was talking about the linking of biofuels projects and linking the price therefore of food to energy it strikes me as a very ominous development I'm not sure that we ever knew what we were getting into down that road but it may have very ominous implications for global security and if the energy prices continue to go up it will also result in enormous income transfers from many of these middle income developing countries to a relatively small number of energy producing countries not all of which are very stable or well disposed to the developed world in their own right so all of this food prices as well as the income transfer means that this the peak oil theories is correct and you know all these theories are correct this strikes me as very much a dangerous and destabilizing trend can I come back to that? so that's on the side of the stability of international affairs but on the side of demographics would it actually also would there be a kind of feedback loop impact on demographic projections as well you mean that the actual the idea of high food prices and how many children people would have that's an interesting well if it were long term certainly it would tend to bring would tend to bring fertility fertility down reverse the flow from urban areas back to the country I should point out I should point out because unless you're except for the demographers in the audience you might not be aware that these projections do build in expectation of a substantial continued fertility decline in current high fertility areas of the development world we're not assuming that Africa remains at 5.7 definitely the projections assume that it would come down answered the question but I'm pointing out that in some that falling fertility is already built into the projection so in that sense it wouldn't change the numbers when I'm thinking about it I'm thinking just over the last few decades certainly falling fertility worldwide has come about at the same time has coincided with an unprecedented decline in the real price of food so I mean at least there's that right I mean think about it there's that association that's certainly true throughout the developed world and I remember a time when I was a kid when newspaper headlines talked about the price of milk that was a real class issue except very recently it's coming back again but that has coincided with declining fertility so I think it's uncertain it's a good question I'm not sure of the answer the fundamental dynamic driving falling fertility is rising affluence and the ability to invest in quality of children rather than quantities is sort of development triggers they go hand in hand with lower fertility rising agricultural prices and sort of slow this development process you might actually push the other way right so I retract my initial my initial I'm sure Richard and Neil will be able to stay around a little bit afterwards let's give them both a big applause thank you very much thank you all for coming